Boeing reaches new deal with union

Boeing’s largest union said Thursday that it would hold a vote on a new contract offer after workers rejected two earlier proposals. The union’s 33,000 members have been on strike since Sept. 13, dealing a damaging blow to the struggling aerospace manufacturer.

The offer was negotiated by company and union leaders, with help from Biden administration officials, including the acting labor secretary, Julie Su. In a statement, the union encouraged workers to accept the offer in voting scheduled for Monday.

“It is time for our members to lock in these gains and confidently declare victory,” said a statement from the leaders of two chapters of the International Association of Machinists and Aerospace Workers, which represent the workers on strike. “We believe asking members to stay on strike longer wouldn’t be right as we have achieved so much success.”

If workers do not take the deal, they “risk a regressive or lesser offer in the future,” union leaders warned. District 751 of the union represents the vast majority of the workers, while another chapter, District W24, represents the rest.

The workers mostly support the company’s commercial airplane division in the Seattle area, where Boeing builds most such jets. They walked off the job after 95% of those voting rejected a contract that union and company leaders had negotiated. The workers rejected a second offer with better terms last week, with 64% voting against the proposal. The union has not said how many people participated in either vote.

The new contract offer represents an improvement over the two rejected proposals. It would raise wages cumulatively by more than 43% over the four years of the contract, up from nearly 40% in the last offer, according to details shared by the union. The deal also includes a $12,000 bonus for agreeing to the contract, which can be diverted in any amount to employee retirement plans. That figure combines a $7,000 ratification bonus and a $5,000 one-time retirement contribution in the previous offer.

In a statement, Boeing said the average machinist would see annual pay rise to more than $119,000 by the end of the contract, up from nearly $76,000 today.

Many workers are still furious over the loss of a defined-benefit pension a decade ago. That anger fueled resistance to the previous offers, even among those who don’t expect the company to restore the pension. In interviews before the vote last week, many Boeing workers said they felt they deserved more from a contract and were confident that they would get that by continuing to strike.

If members approve the contract, it will replace a 2008 agreement that was reached after a two-month strike. That walkout contributed to a decline in revenue of about $6.4 billion that year because the company delivered 104 fewer planes than expected.

A rejection would extend the strike, which has taken a substantial toll on Boeing, costing the company at least $5.5 billion in lost earnings in its first six weeks, according to an analysis by Anderson Economic Group, a research and consulting firm in Michigan. The total economic fallout of the strike-through October, including its effect on suppliers and customers, was more than $9.6 billion.

The strike has also jeopardized Boeing’s investment-grade credit rating. Depending on how long the walkout lasts, the company could face a downgrade to junk status, which could raise its borrowing costs, ratings agencies have warned.

Boeing has taken several cost-cutting measures, pausing some spending and issuing temporary furloughs for tens of thousands of other employees. As part of a broader restructuring, the company’s CEO, Kelly Ortberg, announced last month that Boeing would cut 17,000 jobs, or 10% of its workforce.

The company recently raised more than $21 billion by selling shares to investors. Moody’s Ratings and Fitch Ratings both described the fundraising as a positive step, but said they were still reviewing whether to downgrade Boeing’s credit rating.

Boeing makes most of its commercial airplanes in the Seattle area, including the 737 Max, the 767 and the 777. Boeing makes its 787 Dreamliner at a nonunion factory in North Charleston, South Carolina. In all, the company employs more than 66,000 people in Washington state, but it indirectly supports more than twice as many jobs there, according to a report from the Seattle Metropolitan Chamber of Commerce.

The Max is Boeing’s most popular commercial jet, accounting for three-fourths of the 6,200 planes the company has on order. But production is far below Boeing’s target because of a crisis that began in January when a panel blew off a Max during an Alaska Airlines flight.

That episode renewed concerns about Boeing’s commitment to quality and safety five years after two fatal crashes involving the Max. The panel blowout has led the Federal Aviation Administration to cap Max production to 38 planes per month until it is satisfied that Boeing has improved its quality practices. Production was still below that number before the strike began. And it will take some time to increase production, even after the stoppage ends, Moody’s said in a statement.

“We believe the hangover from the strike will weigh on monthly production of 737 Max aircraft next year,” the agency said. It will probably take weeks for workers to go through refresher training, Moody’s said, and the uneven supply of parts will most likely remain a problem.

This article originally appeared in The New York Times.